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Sustainability: Moving from Common Sense to Common Practice
2016 International Conference
Leesburg, VA - National Conference Center

September 18th - 21st

Managing Under Uncertainty in the TOC Way

Eli Schragenheim - CEO of Elyakim Management Systems Ltd

Amir Schragenheim

Goldratt defined the three big fears of managers: complexity, uncertainty and conflicts. He also said that organizations try to impose certainty on uncertain situations.

I claim that dealing with uncertainty is the cause for the biggest fear of managers and this core problem causes most of the other fears.

I like to define four different categories of decisions under uncertainty:

  1. Dangerous situations where any choice is risky.
  2. The decision involves very low probability for a disaster.
  3. Decisions with no prior experience and thus the risks are not known.
  4. Decision concerning common and expected uncertainty.
I claim that for managing organizations the fourth one has the more severe consequences, but it is that type of uncertainty that is ignored by the current management practices, and it is this category that causes the biggest fears of managers.

TOC has contributed a lot to this last category by introducing buffers into the planning and buffer-management as control-mechanism. However, there are a lot of opportunities to expand the TOC knowledge to cover more and more management practices, to significantly reduce the fear and vastly improve the overall performance.

I will also relate to Nassim Taleb concept of Antifragile as a topic for discussion. Taleb certainly touches the same problem, but his emphasis is somewhat different than mine and the existing TOC tools.

Goldratt pillar "Never Say I Know” is certainty part of the presentation. I intend to inquire into the saying by Goldratt "Don’t Say you know nothing”.

Eventually I like to present a general approach to management under uncertainty and how should we tackle the personal fear of managers.
Eli Schragenheim - CEO of Elyakim Management Systems Ltd

Eli is an Associate Managing Director at Elyakim Management Systems Ltd. (Israel) and an international expert in the Theory of Constraints (TOC) and its links to other management philosophies. He has worked closely with Dr. Eliyahu M. Goldratt, the primary catalyst in the creation of TOC, for many years. He’s a co-author of the best-selling business novel "The Goal III: Necessary But Not Sufficient”.

In 1985 Eli joined Creative-Output, a software company run by Dr. Eliyahu M. Goldratt. The software was called OPT, a very sophisticated software for scheduling the shop floor. The software had challenged some very common paradigms and Dr. Goldratt realized that software is not the right tool to challenge ideas that were taught in the universities and were well ingrained in the minds of most managers. The Goal came up in 1984 and Dr. Goldratt looked for another tool to help people realize the flawed paradigms. The OPT game came out at 1985, to be followed by several "simulators” that were developed by Eli Schragenheim to facilitate the introduction of new ideas. Then, Eli Schragenheim was kindly requested to deliver the first workshop based on the simulators. So, he became as educator, and then also a consultant.

In the last twenty-eight years Eli Schragenheim has taught, talked and consulted in more than fifteen countries, including the US, Canada, India, China and Japan. Eli lead many TOC development and education efforts.

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